Fast-growing spending on pensions and healthcare will reduce the debt status of the world’s richest industrialised countries to junk within 30 years unless their governments take action to balance budgets and shrink outgoings, according to a report released on Monday.

Standard & Poor’s, the credit ratings agency, says if fiscal trends continue growing, the cost of ageing populations will fuel downgrades of France, the US, Germany and the UK from investment grade to speculative, or junk, category France by the early 2020s, the US and Germany before 2030 and the UK before 2035, according to Paivi Munter.They are currently in the top Triple A category, enabling them to borrow at low rates.

The debt ratios of these countries are going to reach levels higher than during the second world war, S&P says. Moritz Kraemer, credit analyst at S&P, says: “Without further adjustment either to current fiscal stance or to social and healthcare costs, the general government debt ratios of France, Germany and the US will surpass 200 per cent. This will result in deficits more akin to those associated with speculative grade sovereigns.”

The agency’s model shows countries can lessen the ageing effect by having tight budgets before demographic pressures peak. The US faces healthier demographic trends than Europe but its budget deficit will cause some problems when population ageing accelerates about 2020.